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  • 🔔 Economic power shifts, marshmallows & manipulated data

🔔 Economic power shifts, marshmallows & manipulated data

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Global economic power continues to shift from West to East according to this report by FactSet

It's a bit of a promo piece for their ETF's but highlights some good trends to keep an eye on...

We would encourage a shift to frame the thinking about megatrends toward the trends that ultimately create lasting material impact on economic values:

Emerging Economies in the East

  • Share of global GDP is shifting from the West to the East

  • Asia transforming from cheap manufacturing bases to homes of innovation hubs

  • Asia accounting for nearly 80% of global economic growth and 85% of growth in global consumption

Social and Demographic Changes

  • An aging population with lowering birth rates has led to a reduction in active workforce

  • Improved standard of living and increase in healthcare spending

  • Changes in social behavior, accelerated by COVID

Environmental Challenges

  • Increasing awareness on climate changes due to both external scrutiny and growing consciousness

  • Government initiatives and policy supports to reduce carbon footprint and encourage the use of clean energy

Technological Breakthroughs

  • New innovations and developments in processing power (faster), precision (more accurate), and materials (better fit)

  • Hyper-connectivity of people (social media) and things (Internet of Things - IoT)

While technological advancement is arguably the backbone of all these transformational impacts, we increasingly find that technology has become an enabler, a language that drives the success of leaders across sectors.

As investors, it is thus imperative that we do not limit ourselves to the technology sector alone as the change agent in the innovation space but look at technology as the key to unlock the enormous opportunities that drive Asia and global productivity growth in the coming decades.

100% agree with the conclusion.

Technology alone is not enough.

It's the application of technology that drives growth.

Whilst the shift from East to West is set to continue in coming decades, some of the 'East to East' shifts are taking longer than anticipated 👇👇👇

"[Vietnam's] engineering workforce is still far from adequate," the person said. "With all the travel restrictions, it's only feasible to make products in Vietnam that are already in mass production elsewhere, rather than starting production of upcoming products from scratch in the country."

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Remember that marshmallow test?

The experiment tests a childs response when presented with a choice between one small but immediate reward, or two small rewards if they wait...

In case you're not familiar with it, the basic idea is that your willpower at 4 years old predicts your life outcome. Which is a pretty depressing thought...

And clearly wrong.

Whilst delaying gratification is clearly something that impacts life outcomes, it's also a skill that can be learnt.

And that's not all!

A variation of this experiment was tried recently, to test if cooperation influenced temptation.

This was the conclusion 👇👇👇

Here's the full post 👇👇👇

Definitely recommended reading 👇👇👇

...what I still consider to be the biggest error economists have ever made: the assumption that you can model humans as acting in their self-interest and nothing else. This assumption famously is traced back to Adam Smith’s Wealth of Nation where he wrote the famous lines:

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

Ironically, Adam Smith was smart enough to know that this description of humans and self-interested beings is incomplete. He wrote an entire second book, The Theory of Moral Sentiments, about the flaws of this assumption.

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Official China data: Can it be trusted?

Let's do the maths...

30 billion is 10% more than 32 billion. Righto!

And this is why no-one trusts the official figures..

China Beige Book do excellent digging and are definitely worth a follow! 👇👇👇

 This is not a joke. The entire official FAI series 2019-21 has effectively been overwritten to show YoY growth. https://t.co/0fSX1v1sst— China Beige Book (@ChinaBeigeBook) August 18, 2021